Independent Contractor or Employee?

The presence of a specific contract may indicate an independent contractor relationship but this alone is not the determining factor. The Supreme Court of NZ decision in Three Foot Six Ltd v Bryson case enables the Employment Relations Authority to enquire into the “real nature of the relationship” to determine whether you are in fact an “employee” or an “independent contractor”. *The following table is a general introductory guide only that describes some of the key differences between Independent Contractor’s and Employees. The table is not to be relied upon or used as a substituted to obtaining your own legal advice to cover a specific factual situation.

INDEPENDENT CONTRACTOR

EMPLOYEE

 

THE CONTROL TESTS – BEHAVIOURAL & FINANCIAL ASPECTS INDEPENDENT CONTRACTOR

 

You set your own hours and work with little or no direction or training;

You have control over the means of accomplishing the work.

You work unsupervised. Your principal can only control the final results of the work;

You provide your own training; You carry your own insurances;

You pay your own tax;

You decide how much the work is worth e.g. commission or by the job basis;

You make a profit or loss directly;

You can only be fired for breach of contract;

You cannot terminate your relationship with the principle at will.

You cannot raise a personal grievance

Your employer dictates the means and manner in which you perform your work;

Your employer trains you and directs your work (supervision), including hours of work, what tools or equipment to be used, specific tasks to be performed and how the work is to be done, the worker is likely an employee;

Your employer is legally responsible for your negligence and carries its own insurance covering your work; Employer deducts ACC premiums and PAYE on your behalf;

Employer makes the profit or loss from your work;

You can only be terminated in compliance with the provisions of your individual employment agreement and the Employment Relations Act 2000

 

THE FUNDEMENTAL TEST

 

You supply your own tools;

You pay for all your own business and travel costs

Employer provides your tools for work;

 Employer pays for all your business and travel expenses

 

THE INTEGRATION TEST

 

Your work is not an integral part of the business. The business can carry on without you;

Your services are available to the public at large and you may have multiple clients

Your work is a part of the regular business of the employer.

You work exclusively for the employer